Missouri's legislative session ends with $200 million tax cut

by Karen E. Culp

SBJ Staff

Another legislative session concluded in Jefferson City May 14. Despite concerns during the session's last week that the General Assembly's performance this year might be lackluster, the legislature passed a bill to cut more than $200 million in taxes for Missourians.

"We started slow, but we did manage to pass a major tax-cutting package. This is a very broad-based bill, and I am extremely happy that we were able to get the corporate franchise tax reduction in there," said Speaker Pro Tem Jim Kreider, D-Nixa.

The tax reduction bill, House Bill 516, cuts the corporate franchise tax by $32 million. The bill, if signed by the governor, will reduce the franchise tax rate by 33 percent for those who pay it, and will increase the franchise tax filing threshold from $200,000 to $1 million in assets, eliminating the tax altogether for many Missouri small businesses. In addition, a provision passed that would move the oversight of collection of the tax from the Secretary of State's Office to the Department of Revenue.

The other components of the tax-reduction bill include increasing the personal exemption on the state income tax from $1,200 to $2,100, which is to cut tax bills by $155 million per year, and a $6 million tax cut for self-employed individuals, which comes in the form of deductions for health care premiums.

The state program is to complement the federal program for self-employed health care deductions. The program allows a 60 percent deduction on the federal tax return, which increases to 70 percent in 2002 and 100 percent in 2003 and thereafter. The state will, with this measure, allow deductions of 40 percent in 1999-2000 and 30 percent in 2002, raising the total deduction to 100 percent four years before the federal measure would.

Rep. Norma Champion, R, Springfield, said the corporate franchise tax reduction was one she had supported for some time.

"I was quite pleased that we did get some tax reduction passed this session, but as far as I'm concerned since this is only what is required to keep us below the Hancock lid, this is not true tax relief. I would have liked to have cut more than we did," Champion said.

"I don't think there needs to be a corporate franchise tax, period, but this reduction is a step in the right direction," said Rep. Mark Wright, R-Springfield.

Rep. Roy Holand, also a Springfield Republican, said the prospect of having to issue checks to taxpayers for Hancock refunds was too expensive.

"This should get us to a level where we won't have to issue checks," Holand said.

Another measure to assist small business, according to Kreider, was a bill to shift the burden of proof in tax cases from taxpayers to the Missouri Department of Revenue.

"Right now, if a business is involved in a tax case, it's guilty until proven innocent, and I think this could shift that mentality," Kreider said.

Kreider also supported a measure that passed regarding alterations to buildings required under the Americans with Disabilities Act. This provision allows a state income tax credit equal to 50 percent of all eligible access expenditures incurred by small business in excess of the amounts already covered on the federal level.

"I think this is especially important to small businesses and downtowns," Kreider said. "It can be very difficult for these older buildings to comply with the federal regulations, and very costly for them, too. I've been told that the average restroom renovation can cost $8,000 to $12,000."

Kreider also supported successful measures to assist agricultural businesses. One measure appropriates $6 million for tax credits to help those developing value-added agricultural products. Another allows southwest Missouri dairy farmers to join the Southern dairy compact.

"Right now we're spending $34 million shipping milk into Missouri, and we should be putting that money into dairy farmers' pockets," he said. "The ability to join a compact like this could stabilize our dairy farmers and help them garner the prices they need to stay in business."

Sen. Roseann Bentley, R-Springfield, supported a measure to require background checks on employees of day-care centers. The measure would require the background checks, and state funding would not be available to centers that did not provide such checks, Bentley said.

Bentley also supported a measure to improve the Community Improvement District legislation she worked to pass during 1998. The new component of the CID law allows the self-taxing districts to tax business licensees in a given district. The law now allows for taxation of property owners in a district.

A measure to allow employers to give information about former employees without fear of legal action against them also passed, Bentley said.[[In-content Ad]]